Another typical news report that removes part (and usually a key point) of a quote to filter down to a couple "jump out at ya" words, Longhorn and scary, thus making the quote appear to the simple-minded as Gates stating Longhorn as being scary...oooh be afraid of the next version of Windows... and questionable and not clear to a person that can read past "scary".

"Longhorn is a bit scary. ... We have been willing to change things,"

[notice the ellipses between "scary." and "We have been..."]

Longhorn is a bit scary to whom, Microsoft's business or the customers?

If you read further, I comprehend it as Longhorn is scary to Microsoft as a business for the fact that it may not take off too well. That is what Billy was talking about, from what I understand.